The urge to make life simpler and more convenient has led to the production of many life-changing products and services that the world is enjoying today.
The world is gradually becoming a digital village where everybody worldwide can connect on the internet without barriers to exchange ideas, products, and services.
Many online products/services have made running a business, selling a product, achieving your goals, nurturing leads, maintaining customers, and connecting with family/friends less complex and achievable.
Software as a Service is one of the wonders of technology that is helping business owners, sales reps, and sales managers generate leads, nurture the lead, close sales, and help with post-purchase customer support.
Are you a SaaS business owner? Are you an aspiring SaaS sales rep seeking more knowledge about the SaaS sales industry? Or are you just seeking knowledge on the topic for personal purposes? Whatever your reason, this complete guide will provide you with everything you need to know about SaaS sales.
What Is SaaS?
Software as a service (SaaS) is web-based software that is accessed, managed, and secured.
SaaS, also known as software on demand, is a way of licensing and delivering web-based software. The software is centrally hosted, managed, updated, and sold by the service provider.
There are so many online products you interact with daily; you might not be aware that they are SaaS products. For example, do you use google drive? I am sure you have received one or two emails before; Gmail is an excellent example of SaaS.
Popular examples of SaaS products
What are SaaS sales?
SaaS sale is a process of selling web-based software to buyers. Selling SaaS products can be more complex than the traditional sales method. SaaS products are usually more expensive, and it requires a longer sales process to close deals.
SaaS products are hosted, secured, and updated by an outside vendor or service provider.
SaaS sales include all the processes involved in selling and upselling SaaS products to existing customers or newly acquired customers.
Who are SaaS sales reps?
SaaS sales representatives are professionals who gather potential leads, nurture the leads, manage information, and guide potential customers to become paying clients. SaaS sales reps are usually well-informed and trained to sell a particular product.
SaaS sales commission
The sales commission is usually a percentage of the total revenue generated to the company within a month, known as monthly recurring revenue -MRV or within a year, known as annual contract value -ACV. The commission is usually based on the result of key performance indicators and the company’s initial sale quota or goal.
There are many methods of calculating sales commission in different SaaS companies; some of the popular models include; the accelerator, tiered, and base salary + commission models.
Accelerator model
The commission in this model is calculated based on the percentage of the overall company’s sales goal exceeded by a sales rep. For example, if the sales goal for a particular rep or sales team is 80% and the team achieved a 100% sales goal before the stated period of time, then the commission rate for such team or rep will increase by 20%.
Tiered model
This method includes a range of sales goals that must be exceeded by a sales rep and the compensation or commission plan attached. The commission attached to this model varies across different SaaS companies globally. below are some of the popular tie range
- The first tie covers 100-110% base goal exceeded
- The second tie covers 110-125 base goal exceeded
- The third tie covers 125 base goals exceeded and beyond.
Base salary + commission model
In this model, the commission is paid when a sales rep has successfully incurred the base salary in revenue for the company. Once a sales team has closed enough deal to cover their salary and other benefits, the company will then release commission for the team.
How to become a SaaS sales Rep
Business software companies need solid and consistent sales reps to sell their SaaS products.
As a salesperson, selling SaaS products/services is different from selling other products. This is because it requires specialized knowledge about the product and its potential customers.
Also, the reward attached to SaaS sales is more than the reward acquired on regular sales. The effort and time required to close SaaS sales and retain customers might be longer than usual.
SaaS sales salary and commission is a great form of encouragement for sales reps to put in all their best toward achieving their stated sales goals or quota. So how do you get employed in your desired SaaS company as a sales rep? Below are 3 key steps you must take. Find how b2b sales is processing in the market.
1. Know the type of SaaS company you want to work with
There are so many SaaS companies that specialize in various products. But, first, you must know the ideal company you want to work with as a salesperson.
Knowing your ideal company will help you familiarize yourself with its product to gauge what your sales performance will be.
This will help you narrow down on the type of sales skill you need to acquire to succeed in your chosen field.
Instead of applying for a sales rep position in any available SaaS company, it is best to use it in your ideal company. For example, your ideal companies may be cybersecurity software companies with 40+ employees in a specific area in the US, paying sales reps at least $65,000 as base salary with commissions for exceeding sales quota.
Knowing your ideal company will help you plan well, get the right training, and write a good resume that will eventually land you the desired position. Check out what is tech sales and how it’s evolving.
2. Apply for the job like a sales pro
In the sales position you are applying for, hundreds of people are also using; with this fact at the back of your mind, you need to be very smart to stand out.
Almost everyone writes their resume the same way, using the same format. It is tough to tell people apart on paper; that is where your smartness comes into play.
In most companies, due to the high number of applicants for a particular sales position, sales managers use “Applicants Tracking Systems” to sort out and filter applications based on specific keywords. This means you have to be smart with the kind of words you use when writing your resume and cover letter.
Another essential step is to do professional research on who the key decision-makers are in your ideal companies. Then, try to get in touch with them through email outreaches and introduce yourself and what you are capable of achieving for the company. LinkedIn is also an excellent platform for connecting critical decision-makers in your field.
3. Familiarize yourself with sales tools
Sales tools are the various software used by the sales team to generate leads, nurture the lead, and manage existing customers. It also includes all the tools used to measure sales productivity.
This is where your sales experience with other sale companies come into play. So don’t worry if you are a newbie to selling; ensure you know how to operate some of the sales tools needed to succeed in your desired field. Find out the difference in inside sales vs outside sales.
SaaS sales models
In most SaaS companies, the product’s price is the primary determinant of the adopted sales model. The more expensive the product, the more costly and complex the sales model.
Most SaaS companies adopt three major or common SaaS sales models: customer self-service, enterprise model, and transactional sales model.
Customer self-service
Customer self-service motivates customers to use your SaaS product themselves by using free trials and other sales techniques to attract them. The self-service sales model is mainly about the product and the marketing team’s abilities to build awareness, generate leads and encourage potential customers to opt-in for a trial. The sales team then guides the potential customers through their buying journey until they become paying customers.
The sales team or sales rep uses sales tools and other support materials, promotions, newsletters, and strategic advertisements to avoid churning and ensure that the prospect doesn’t lose interest in the product.
In a competitive market like video conferencing, some companies use the freemium model by offering a full-featured basic plan for free. Unfortunately, the premium features have to be paid for. For many SaaS companies, offering a free program is not profitable in the long run.
Customer self-service is always backup with free trials by most SaaS companies. However, this sales model also has its limitations. It is ideal for selling lower price products at a higher volume, and it is inadequate for selling SaaS products that need personalized customization for different customers.
Transactional sales model
The transactional sales model is also known as the sales-assisted model because it adds a human touch to the self-service sales process. Ideally, it involves personalized customers or anyone who needs a customized plan.
This sale model provides customer assistance and support during purchase, such that they can book a call with a sales manager, request a product demo, and answer their questions.
For sales reps to achieve their monthly sales quotas, they need to know the product’s detailed features and other characteristics. They are equipped with effective training sessions and work closely with product managers and engineers to serve their customer needs best. Generated leads and previous customers are usually targeted and nurtured separately by region or based on their need for customized products or services.
Enterprise sales model
An enterprise sales model can be in multiple forms, but it often involves reseller, referral, and affiliate marketers. They act as an intermediary between the SaaS companies and the potential customers or existing customers. They receive compensation or commission for every customer they bring on board.
The complexity and price of the product determine the number of stockholders that will be involved in the sales model.
Resellers often close more deals in most companies or sell in larger quantities than affiliate and referral marketers. This is because they sell directly to their customers, who will likely introduce the product to another person. Whereas most affiliates do not have a direct relationship with the customers, they are referred.
Many SaaS companies adopt the enterprise sales model due to its cost-effectiveness. The partners or stockholders get paid for sales, and the company does not need to invest in marketing without results.
Some of the costs involved in enterprise sales include providing support and training for the partners involved in the sales model. However, the benefits and profit generated far outweigh the costs of providing such support. Hence, the enterprise sales model is often adopted by SaaS companies whose products are more expensive to aid awareness and sales.
The SaaS sales process
The sales process involved a series of steps SaaS sales reps or teams to guide prospective customers through their buying journey, or turn generated leads into paying customers. Therefore, the SaaS sales process needs to be organized and well researched before and during the building up process.
The SaaS sales process is very similar to the inside sale process because they require fluent technological skills. Since SaaS products are web-based and are accessed over the internet, most of its leads or ideal customers are internet users, which means leads are generated online and follow-up online.
The first step towards building a productive SaaS sales process is intensive research about your ideal customers. Identify who they are, their pain points, how your product can solve their problem, where they spend their time online, and the website they are likely to visit. This information will help you build the necessary touchpoints to guide them to be aware of your product and how it can perfectly solve their pain point.
Building a sales pipeline becomes easier once you have the above information concerning your ideal customers.
What is sales pipeline?
A sales pipeline is the visual or diagrammatical representation of the lead’s buying journey stages within a sales process. It shows the exact position of each prospective buyer, hence helping sales managers to know when to follow up on leads for proper nurturing and when prospects are ready to make a purchase or close deals. Check out the various stages of the sales pipeline.
The various stages within a sales pipeline include prospecting, lead qualification, lead nurturing, presentation, handling objectives, closed deals, and post-purchase/ customer retention. So how do you generate SaaS sales lead? What are the various steps of following up on leads, and how do you close deals successfully? Everything will be explained below.
1. Prospecting
This is creating awareness for your SaaS product to attract your ideal customers into your sales funnel. Since you already know who your ideal customers are, the next step is to know when and how to draw them to learn more about the value of your product.
You can attract prospects to your product or services through the following channels
- Social media campaign
- Blogs
- Newsletter
- Online adverts
- eBooks
- Whitepapers
2. Lead qualification
Lead qualification is sorting out the percentage of prospects willing to purchase your SaaS product and then moving them further within the sales pipeline. Not all prospects that click on your free trials are eager to buy; some leads will cancel before the free trial’s deadlines. This is either because your product didn’t meet their expectations or you want some customized feature you cannot provide.
The data from this stage helps judge the level of interest the prospect has in your product; it can also help you improve your product to serve your prospective customer’s needs better. The data at this stage will show the number of leads gotten and the percentage of leads genuinely interested in your product from your various marketing outreaches and mass awareness.
Suppose the percentage of people interested in your product from various marketing outreaches is equal to half of the total audience you reach out to. In that case, you will know that your marketing teams are working effectively and that you are attracting the right or ideal customers.
3. Lead nurturing
There are so many SaaS companies providing the same solution as you do. Unfortunately, this means you have competitors. They may not offer the exact product or service like yours, but it might be a substitute.
That is why lead nurturing is very important!
People’s attention span on the internet is concise, except they are intentionally searching for something. So even if you manage to attract customers to your products, they might forget about it within a short time frame.
This is when your marketing team ensures that prospects are being reminded frequently through emails and follow-up advert. For example, some prospects might subscribe to your free trial and forget to renew the subscription. Your marketing team must remind them before the free trial deadline, although this is mainly applicable to the subscription-based pricing model.
4. Presentation
In the case of a physical product, presentation is the stage where you meet your prospect face-face to discuss more what they need. You have the chance to learn more about their pain point, explain how your product or service can provide the solution for them, and also judge their readiness to purchase based on their facial expression and body language.
The reverse is the case when it comes to SaaS sales. Most of the sales activities are carried out virtually, which means you will have to rely on other sales skills and tools to serve your prospect better and make sales.
Active listening, empathy, and attention to detail are essential skills in this stage. You should be able to summarize what your prospect needs within a long phone conversation or email.
5. Handling objectives
During your presentation stages, what are your prospect’s complaints? What do they want your company to improve on? Do they request any personalized and customized product or service? This is when you answer all their questions and clear their doubts about your product.
6. Close deal
This is the moment when the prospect finally purchases the product and becomes your customer. Ensure to approach this stage with caution because it is the stage that will determine the success or failure of all your previous efforts. Do not succumb to lowering your price or giving discounts to close stubborn prospects at the expense of your profit and high quality.
A prospect that won’t purchase your product because of the price will quickly be lost when they see a similar product with a lower price than yours.
Your sales goal is to build trustworthy and consistent customers who believe entirely in your product, especially for the subscription-based pricing model. This is why it might not be easy to gain some prospect’s trust with discounts, especially when they believe that your product is too expensive for them.
7. Customer retention
To shorten the time your sales teams spend building the sales process, it is important always to retain existing accounts or customers. Post-purchase follow-up will reduce the overall customer acquisition cost while yielding more sales.
Adopt customer relationship management tools to maintain a strong relationship with your customers and support them when they need help with your products.
Building a strong relationship with your existing customer will also encourage them to introduce your product to their friends and family. People generally like companies with a good customer care support system because it removes the fear of being stranded when they need help.
SaaS sales cycle
The sales cycle includes all the steps taken by the buyer before purchasing a product. Sales process is the step taken by sales teams to sell a product, while the sales cycle help sales rep intercept prospect at every stage of their buying journey.
The length of the SaaS sales cycle is based on many factors: the price of the product, the complexity of the product, the free trial length, and the type of customers.
Price of the product
The higher the price of the SaaS, the more extended and more complex the sales cycle. This is because expensive SaaS products usually involve many decision-makers and intermediaries. This is why choosing and adopting an effective sales strategy is essential.
Complexity of product
The longer the time interval needed to understand all the benefits and features of your SaaS, the longer the sales process and Saas sales cycles, respectively.
If you generate leads of your ideal prospect whose pain point you are solving may shorten the sales cycle because they will tend to understand the solution faster during the demo.
Free trial length
The length of the free trial period can also slow down the SaaS sales cycle. This is because some prospects will want to exhaust the free trial period before buying; hence if the free trial period you offer is 14-days, be ready to start selling only after that time period.
The type of customer
It is essential to attract the right prospect into your sales pipeline. Your ideal leads will likely not give your much problem, but when you are convincing prospects that are not entirely interested in your product, it takes more time and dedication.
SaaS sales strategy
SaaS sales strategy includes all the well-laid plans of action designed to increase sales and overall revenue generation of your software as a service.
Below are some of the steps taken to achieve maximum productive sales from your SaaS business.
- Identify your ideal audience and their pain point
- Create software products that provide maximum solution and value to your audience
- Choose a SaaS sales model relevant to your product
- Create and monitor your sales pipeline effectively
- Create good customer care and support system
- Set sales and revenue goals for your sales reps
- Embrace post-purchase customer retention strategies by upselling to existing customers
- Keep track of your sales team’s performance using key metrics.
SaaS sales metrics
These are the various methods of measuring the productivity of all your SaaS business’s sales and marketing activities. Here are some of the key metrics you must keep track of.
1. Churn rate
Churn rate is the percentage of customers you lose annually. This can be calculated by dividing the number of customers you’ve lost within the year by the number of customers you started with.
2. Monthly Recurring Revenue
MRR is the total income your company is expecting within every 30 days. A fee is usually agreed upon for the subscription pricing model, mainly paid monthly.
3. Annual Recurring Revenue
ARR represents the total recurring revenue your client agrees to pay on an annual basis.
4. Lead Velocity Rate
This is how fast your sales teams move leads down the sales pipeline. It measures how long it takes to turn a particular prospect into a paying customer.
5. Revenue per Lead
This is used to measure the revenue each rep brings in per lead. Revenue per lead will help you to estimate accurately the number of leads a rep can manage for maximum productivity.
6. Customer Acquisition Cost
This is the total cost required to close a deal. This can be calculated by dividing the total cost of sales and marketing by the number of deals closed during a specific period.
This number will be higher for companies that adopted the enterprise sales model and lower for companies using a transactional sales model.
7. Closed/Lost Deals
Closed deals have been successfully paid for by customers, while the lost agreement is the exact opposite when prospects purchase the product from your competitor. Measuring this metric will help you know your sales reps’ overall efficiency and productivity.
How can Sloovi help your SaaS business?
Sloovi is an all-in-one sales and marketing management platform that provides a solution to all your sales activities and helps you measure your SaaS business’s productivity. Their products include the following;
Sloovi outreach is an end-to-end sales engagement platform where sales reps can create, monitor, and manage the SaaS sales pipeline. It can also be used for cold outreach, reporting, and lead management.
Sloovi feedback can collect data about how your existing customers feel about your product or service and provide a one-on-one conversation with customers. This will help you enhance customers’ experience by improving your product and delivering the best service to them.
Sloovi email signature will help boost your brand/product identity by generating a free email signature with a customizable template to suit your needs.
You know how important it is to consistently reach out to your prospect at every stage within the sales pipeline; sloovi email signature will simplify the task.
Signup for a free trial or book a demo today to learn more about this amazing software!